The World Bank (International Bank for Reconstruction and Development, or IBRD) has valued a disaster bond that will furnish the Government of Jamaica with financial protection of up to US$185 million against misfortunes from named storms for three Atlantic typhoon seasons finishing off in December 2023.
Jamaica is the first country in the Caribbean district, and the first of any little island state, to autonomously support a fiasco bond, otherwise called a cat bond. Jamaica was one of the sixteen nations in the Caribbean Catastrophe Risk Insurance Facility that profited with IBRD’s first ever cat bond in 2014.
The securities were given under IBRD’s “capital in danger” notes program, which can be used to move hazards identified with catastrophic events and different dangers from developing countries to the capital business sectors. Payouts to Jamaica will be set off when a named storm event meets the parametric measures for area and seriousness set out in the bond terms.
The transaction includes an innovative reporting feature resulting in a quick payout calculation, within weeks of a qualifying named storm. It is also the first cat bond to use an innovative cat-in-a grid parametric trigger design for tropical cyclone risk.
The Caribbean region is vulnerable to climate related events and this move is very essential in protecting the welfare of the people in the region.
Meanwhile, Jamaica’s Minister of Finance and the Public Service, Government, Dr. Hon. Nigel Clarke, has added that:
“The Government of Jamaica has strategically prioritized Disaster Risk Financing to mitigate the adverse fiscal impact of tropical cyclones and natural disasters, thereby strengthening Jamaica’s economic resilience. We are pleased with the successful placement of this catastrophe bond, which adds an indispensable layer of disaster risk financing that complements our multi-layered approach. In this transaction, Jamaica benefited from the vast technical resources of the World Bank, and from the strength of its balance sheet. We are also grateful to our bilateral partners, the Governments of the United Kingdom and Germany, through the Global Risk Financing Facility, and to the United States through the United States Agency of International Development who provided financial support for the transaction.”
Jamaica is exceptionally presented to typhoon events which represent a critical danger to Jamaica’s macroeconomic standpoint. The Government of Jamaica has adopted a proactive strategy to creating monetary, physical and social flexibility against fiascos, and is being upheld by the World Bank through different financing instruments and specialized help.
The cat bond supplements Jamaica’s arrangement of calamity hazard financing instruments and expands on serious World Bank commitment, including the planning of fiasco hazard model and investigation for Jamaica and the appropriation of a Disaster Risk Finance Strategy by the Government of Jamaica.
World Bank’s support is a necessary part of their efforts within the InsuResilience Global Partnership, whose vision is to reinforce the flexibility of developing countries and ensure the lives and jobs of poor and defenseless people against the impact of environment and disaster risks.
This also shows how significant it is that the Partnership unites governments, civil societies, international organizations, the private sector, and the scholarly world. Furthermore, with harmony, they will actually want to address the difficulties of environmental change.
This new catastrophe bond, will ensure that funds are available rapidly for early response and recovery after hurricanes. Eventually, this will empower Jamaica to fund its own recovery from cataclysmic events and decrease recovery costs.